Enjoying the job thus far Liz? Talk about making an entrance. Her favorability rating plummeted but at least she stuck by her guns and didn’t deviate from her plan within a week of announcing it. Umm…and while I’m not sure thanking her is the correct way to put it, at the minimum she’s introduced many of us to the concept of LDIs! The UK tax cut that wasn’t is just one of many macro headlines keeping markets on their toes. Judging by the green on the screen, they’re actually on the balls of their feet as they sprint higher. But those of you that read the View religiously knew this would happen because we told you as much on Friday. We jest but October has historically gone better post a poor September and that box was surely ticked last month. Seasonal trends are no match for the intensity of negative sentiment markets have been subjected to but for now Q4 is off to a strong start.

On the bright side, at least you’re not one of the 4 grandchildren in Denmark that was stripped of their royal titles…

US markets again feeling the inevitable weight of gravity after yesterday’s [short-lived] relief rally.  Market breadth scales tipped quickly back to the negative with all sectors firmly in the red for the session- (yes, including the ever-buoyant energy darling).  Crude slipping lower, unable to buck the trend even as OPEC+ discussing output cuts to come next week.

Turnaround Tuesday came a day late this week, but it will take more than one day to reverse the down trend. Not to mention, we have yet to break through the 3733 level on the S&P futures. Today’s move higher was spurred, in some part, by a recovery off the June lows. The shocking policy move by the BOE overnight also catalyzed some covering in markets, which lifted all assets off initial lows.

Tuesdays are the blah day of the week, not really doing much except to fill in the five day work week. But markets have deemed the day appropriate to shake off any Monday weakness, and hence the term turnaround Tuesday has been coined. With the S&P 500 closing at a one year low yesterday, today was full of potential for stocks, and indexes started in the green.

No capitulation to speak of yet, though positioning remains defensive and markets continued to slide lower today. Major indices flirted with June lows (SPX=3636, CCMP=10,565), but they held, as it seems we are at an inflection point from a technical/psychological perspective. Shorts may be more incentivized to cover at this point, rather than establish new shorts and/or double down. Nearly all sectors found their way into the red, barring a few, which eked out minute gains.

The negative momentum built and built and built, and the culmination was a day like today. There was a clear sell-off across the markets as indices tested their June lows (3639 on S&P futures and 11k on CCMP futures). The macro-environment remained little changed – 10-year yields remained above 3.67%, the resistance they blew through yesterday on the way to 4.0%. The dollar continued to steamroll everything in its path. The next technical target for the DXY is 120.

We currently reside in a bit of an information gap at the moment – the FOMC is now behind us but boy did that leave a mark. And while it feels like earnings never actually stop per se, Q3 figures won’t come for another 3 weeks. So we’re left to contemplate what to make of a week that’s seen global rate hikes of nearly 600bps. Like someone that was late to a not so surprise party, the Fed and its ilk are racing with a lead foot to get where they need to go.

Another Fed came and went. But whereas in the past the adage has largely been, fade the first move, today the first move was the right one. Sure we had the typical knee-jerk, but post that, equities were quickly jerked lower and stayed that way. It was a given from the get-go that the Fed would be aggressive, and while there was some debate around a 100bp hike, the reasoning behind the increased hike had to do with just the latest hot CPI print.

T-minus 24 hours and markets are in full tizzy. How much the Fed will raise, and maybe even more important, what they will say afterwards, has investors feeling very defensive. The hawkish message out of Jackson Hole, a still strong jobs market, and a CPI that hasn’t shifted, is making this meeting a tough call. Most expect 75bps and “higher for longer”, but the outlier would be 100bps. Does that mean 4.5% is the terminal rate? And if it is, when will the Fed get there?